Breaking Down Your Credit Score Report.

What is a credit score? If you have not ever seen a credit report, it can be hard to understand your own credit score report. Looking at numbers only, scores go from 300 to 850, with 732 being the average nationally. To be eligible for the best rates on loans, lenders usually require a 750 or better rating. When you obtain your scores, you will also see there are a lot of other details about your debts.

There are four sections in a standard credit score report -- identifying information, public records, credit history, and inquiries. Your name, address, and social security number are considered the basic identification information. Look at these details to be certain they are correct because sometimes your name might be misspelled, or there may be additional Social Security numbers. Also on your report will be your birth date, previous addresses, driver's license number, employer, and the name of your spouse. As this information is protected by security, and is confidential, you do not have to worry about it.

The main area to study in your credit scores report is your credit history. There are five categories that your accounts will come under: Real Estate, for first and second mortgages; Installment, for loans with regular payments, like a car loan; Revolving, for credit cards; Collection, for accounts that are well past due; and Other. For each account, the creditor's or lender's name, along with account number, will appear. You should be able to look at the date you opened the account, the kind of account it is, the complete sum you owe, the account status (whether it is opened, not active, closed or paid off), and if you have done a good job paying on the account. If a creditor has made efforts for collection but has simply given up, a note of "charged off" will be evident. How well you have been paying on a scale of 1 to 9 is indicated by a code like R1. Late payments will be noted for your account, with 30, 60, 90 or 120 indicated in a box, which corresponds to the number of days you are behind in payments. You are in decent shape with high scores if you see a green OK coupled with a 0. If an account shows terms such as "charged off," "placed in collections," or "bad debt" it means that the account was more than 120 days past due and sold to a third party for collection. For seven years, these poor credit scores will remain on your report, indicated by charge-offs and debt collections.

You hope that the public records section is blank, as it is the real killer on your credit score report. There you may find a bankruptcy credit report, judgments from the court, tax liens, divorces, wage garnishment, legal actions, foreclosures, and sundry legal issues that may hurt your credit scores. This area will stay on your report for ten years, and contains the most damaging offenses for your credit score. In some instances, these infractions can deduct 300 points off your healthy credit score. So, be certain that you don't become involved in any legal problems with your finances.

The last section of your credit score report has a list of all the third-party inquiries made to your credit scores. "Hard inquiries" originate with you, when you submit credit or loan applications, whereas "soft inquiries" come from companies who want to solicit your business or collect on a debt that you owe them. Getting a lot of inquiries, for instance, if you apply for new credit lines a few weeks apart or have two hard inquiries or more in a period of 14 weeks, can begin to erode your good credit scores. As the inquiries cause a deduction of only 20 points or so each time, they aren't too worrisome, unless you had flawless credit before that you wanted to keep.

About the Author

After contacting Christian credit counselors at Family Life Credit, Matthew Stollinas now enjoys a life free of financial burdens. Matthew recommends Christian credit counseling to anyone wanting to take a faith based approach to their financial situation.